Freight transportation cost breakdown: vehicle and fuel lead, deadhead included

Freight transportation is a VEHICLE-OPERATING SERVICE, not physical production of a discrete product. So this guide inverts the order: the vehicle and fuel - what actually burns money per mile - come first, and the "materials" slot of a manufacturing guide becomes fuel consumption instead.

The costing unit: ONE LOADED MILE (or ton-mile when comparing different payloads) - a standard unit the freight industry already uses, not something Costdown invented.

The industry's biggest pitfall: the empty leg still costs money

A round trip usually has only ONE loaded direction; the other leg runs empty (deadhead) to return or reposition for the next job. Fuel, vehicle depreciation and driver pay all still accrue on the empty leg, with no revenue to offset them.

The operating sequence of one haul

1. Order intake & route planning - choosing routes, combining loads to cut deadhead.
2. Loading.
3. The loaded leg.
4. Delivery & unloading.
5. The return leg - loaded with a new job, or empty.
6. Maintenance between runs.
7. Billing & reconciliation.

Ten categories, in the service's real order

1. Equipment (the vehicle) - leads, mostly owned or long-term leased

Tractor, trailer, truck - depreciated over useful life if owned, or lease cost if leased. Convert to per-mile by dividing monthly depreciation/lease cost by total miles the vehicle ran that month, including deadhead miles.

2. Fuel - stands in for "materials"

Diesel or gasoline, purchased by the liter/gallon. Convert to per-mile using actual consumption between fill-ups, not the manufacturer's catalog fuel-economy figure.

3. Labor (the driver)

Driver pay by month, by run, or by mile. Include wait time at loading/unloading docks - drivers are paid during that time even though the vehicle isn't moving.

4. Cargo loss and damage

Broken, wet or lost cargo in transit - the carrier absorbs compensation or disposal cost. Cost it as a rate times average compensation value, not a felt-sense guess.

5. Consumables - tires, oil, batteries

Tires are the largest item here - tire price divided by mileage life, exactly the same logic as dividing a cutting tool's cost by its tool life in machining. Oil and batteries are divided the same way, by replacement mileage or interval.

6. Subcontracted capacity - hired trucks when the owned fleet falls short

During peak season or a capacity shortfall, carriers hire outside trucks by the run. Take the exact hired rate, converted to the same per-mile or per-ton-mile unit as owned trucks for a fair comparison.

7. Rework - re-delivery

Re-running a haul because of a wrong address, a missed delivery window, or a refused delivery. This is an EXTRA run cost, different from cargo damage - the goods aren't damaged, they just have to be hauled again.

8. Packaging - securing cargo for transit

Load straps, dunnage, stretch wrap to stop cargo shifting in transit. Small, but real, especially for fragile freight.

9. Tolls & terminal fees - unique to this industry

Highway tolls, terminal/yard fees, port or warehouse detention charges - a cost category most manufacturing industries don't have at all, but a meaningful share of long-haul freight cost. Cost per specific route, not a blanket estimate.

10. Overhead - yard, insurance, dispatch

Vehicle and cargo insurance, yard rental, dispatcher salaries for staff who don't drive, fleet management/GPS tracking software. Entered per month, allocated across the fleet's total mileage.

How Costdown calculates it

Two columns, BEFORE and AFTER, for the same ten categories, per loaded mile (with deadhead cost fully included). The system computes savings and payback in months.